Tuesday, March 9, 2010

The commentary brigades are rightly falling all over themselves in praise of the Harper government’s budget plan to eliminate tariffs on industrial machinery and equipment. As economic policy goes, it was the best move in the budget. Whether it says anything at all about the free trade resolve of the Harper Conservatives is another matter. Ottawa talks big on trade, but the equipment tariff cut is a small-time play in the government’s $4-billion annual consumer-punishing customs tariff regime.

The removal of tariffs on 1,541 equipment import categories is a tribute to the lobbying efforts of Canadian manufacturers. Businesses from car makers to carpet makers will benefit from the lower cost of equipment purchases. By definition, that improves their productivity because they will get the same amount of output from fewer dollars invested. Read more here.